Professional Documents
Culture Documents
The Two?
Credit is depend on the mind of debtor to give or not and the interest is not to be paid, but loan is
applied by creditor and the interest has to be paid on loan taken and similarities is both have a
same objective and both is same in nature
Giving a loan and credit provision both has same purpose of giving money. However, while giving
loan there is implied contract (legal) for recovery and interest. But, in credit provision, there is
rarely a written contract and it is extended based on credit rating or reputation and does not attract
interest (for a limited period).
9. How is the income statement linked to the balance sheet?
Net income flows into retained earnings.
10. What Are Fixed Assets And Current Assets?
Ans:
Fixed Asset: Fixed assets, also known as a non-current asset , is a term used
in accounting for assets and property which cannot easily be converted into cash. These are
items of value which the organization has bought and will use for an extended period of time;
fixed assets normally include items such as land and buildings, motor vehicles, furniture, office
equipment, computers, fixtures and fittings, and plant and machinery.
Current Asset: In accounting, a current asset is an asset which can either be converted to cash or
used to pay current liabilities within 12 months. Typical current assets include cash, cash
equivalents, short-term investments, accounts receivable, inventory and the portion of prepaid
liabilities which will be paid within a year.
11. What Are The Benefits Of Trade Liberalization?
Ans:
Trade liberalisation
Two opposing forces have shaped the changing pattern of world trade over the last 200 years; the
promotion of free trade and the protection against free trade. Trade protection is the process of
erecting barriers to trade, such as taxes on imports, called tariffs, and trade liberalisation is the
process of making trade free from such barriers.
The advantages of free trade
It can be argued that free trade creates the following advantages:
1. Specialization and comparative advantage:
Free trade encourages countries to specialise and benefit from the application of the principle
of comparative advantage.
2. Increased world output:
If countries specialize and trade, world output is likely to increase as scarce resources will be used
more efficiently. Mass production will generate considerable economy of scale, which reduce
average costs.
3. Increased competition and lower prices:
Free trade increases competition, which generates further benefits, including lower prices, greater
use of new technology and technology transfer between countries. Free trade will also encourage
the breakdown of domestic monopolies, and provide greater choice for consumers and firms.
4. Higher quality:
Open economies are likely to see an increase in the quality of products available as overseas firms
compete on non-price factors, such as design and reliability.
To calculate gross profit: examine the income statement, take the revenue and subtract the cost of
goods sold. Also called "gross margin" and "gross income".
A call option is an option contract in which the holder (buyer) has the right (but not the
obligation) to buy a specified quantity of a security at a specified price (strike price) within a
fixed period of time (until its expiration).
Q23. Which Debt Instrument Is Preferred By The Company For Financing?
Company preferably uses Debentures for financing because it has to pay a fixed amount of
interest for the period for which it has taken the debentures.
Q27. What Are The Key Steps Involved In Formulating Treasury Policy Of A Firm?
Treasury policy depends upon financial objectives of a firm as to what they would like to do with
short term/ long term funds and how they would like to procure short term/long term funds.
The second step is to ascertain risk and companys risk appetite and invest accordingly.
GDR stand for:- Global Depositary Receipt, which is a negotiable certificate held in the bank of
one country representing a specific number of shares of a stock traded on an exchange of another
country.
Q29.What Is SLR And How Much Is It At Present?
Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in
the form of cash, or gold or govt. approved securities before providing credit to the customers.
Here by approved securities we mean, bond and shares of different companies. Currently SLR is
23%
Q30.What Is CRR And How Much Is It At Present?
Scheduled banks are required to maintain with the RBI an average cash balance, the amount of
which shall not be less than 4% of the total of the Net Demand and Time Liabilities (NDTL), on a
fortnightly basis. Currently is 4%
Q31.Why CRR And SLR Are Imposed?
SLR/CRR is imposed for the purpose of prudence and hence the operative principle is that banks
should hold all the regulatory required risk capital in SLR/CRR
Q32.What Is The Meaning Of Portfolio Management?
portfolio is nothing but managing different type of
securities of a company, and trying to get maximum returns
40. Explain How Ratios May Be Used To Assess The Profitability And Liquidity Of A Business?
For liquidity ratio there are two-1)current ratio 2)quick ratio. for profitability they are divided into
2 categories1) on sales basis-a)gross profit ratio b)net profit ratio c)operating ratio
2) on investment basis-a)return on capital employed b)return on shareholders fund
share ROE/ROCE liquid assets to total assets
c)earning per
41. What Is The Difference Between Prepaid Expenses And Preliminary Expenses?
Prepaid expenses are the Expenses which are made before getting the benefit which we can show
it as current where as preliminary expenses are those expenditure which are made before
registration of company
42. What Is The Difference Between Prepaid Expenses And Preliminary Expenses?
Ans: Prepaid expenses are the paid by the company in advance but the preliminary expenses are
paid when the company is established. Eg. registration charges.
43. Explain The Qualities Of A Smart Investor?
Ans: Smart investors are not emotionally tied to their investment positions: They know that to be
successful, they must not be emotional towards their investment. No matter how attractive an
investment looks or how badly an investment has performed recently, selling at the right time is
just as important as buying. They are aware that no investment will move up forever, and they are
able to sell it when right.
44. What Is Finance?
Ans: "Finance" is a broad term that describes two related activities Eg. the study of how money is
managed and the actual process of acquiring needed funds. Because individuals, businesses and
government entities all need funding to operate, the field is often separated into three subcategories: personal finance, corporate finance and public finance.
45. What Is An Auction? Why Does It Occur?
Ans: An auction is a process of buying and selling goods or services by offering them up for bid,
taking bids, and then selling the item to the winning bidder. In economic theory, an auction may
refer to any mechanism or set of trading rules for exchange.
46. What Is Derivatives?
Ans: A company with a market capitalization between $2 and $10 billion, which is calculated by
multiplying the number of a company's shares outstanding by its stock price. Mid cap is an
abbreviation for the term "middle capitalization".
47. What Are The Criticisms Against His Profit Maximization Objective Of A Business?
Ans: the business having sole objective of profit maximization does not think about customer
satisfaction and its social responsibilities. It blindly goes for making big profit and does not
consider its responsibilities. Profit maximization as an objective can be good for short run but in
long run the business having good name in society in terms of work done for social welfare ,
quality of its products, will matter more.
48. What Is Sensex And What Is Nifty?
Ans: The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator
of all the major companies of the NSE. If the Sensex goes up, it means that the prices of the
stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this
tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the
Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE.
49. What Is The Higher IRR In Case Of Fixed Or Reducing Interest Rate?
Ans: Assuming the total inflow of fund ( without discounting) is same then reducing interest rate
will give higher IRR.
50) What is Beta?
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the
market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that
calculates the expected return of an asset based on its beta and expected market returns.
51) Explain How Ratios May Be Used To Assess The Profitability And Liquidity Of A Business?
For liquidity ratio there is two-1) current ratio 2) quick
Ratio. For profitability they are divided into 2 categories1) On sales basis-a) gross profit ratio b) net profit ratio c)
Operating ratio
2) On investment basis-a) return on capital employed b) return
On shareholders fund c) earnings per share
52) What Is Diluted EPS? In Finance What Is The Use Of Diluted EPS?
A performance metric used to gauge the quality of a company's earnings per share (EPS) if all
convertible securities were exercised. If things go well, there is a good chance that all options and
convertibles will be converted into common stock.
53) How to Predict Capital Adequacy Ratio of ICICI 13.4% and SBI 11%...Which One Is Better
and How?
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities
and other risks such as credit risk, operational risk etc.
More adequate capital to risk weighted assets is better Hence ICICI 13.4% is better.
54) NPA Of ICICI Bank Is 3.2% And State Bank Is 2.3%. Which One Is Better?
Lower the NPA higher the protection to depositors fund. Hence, State Bank 2.3% is better.
55) What Is The Functionality Of Stock Exchange?
The market in which shares are issued and traded either through exchanges or over-the-counter
markets.
56) Briefly Explain About Ledger Postings?
Ledger posting done to find out the balance of a particular Account easily.....while finding the
balance from journal Entries will prove time consuming........with the help of Ledger a/c trial
balance prepared and with the help of Trial balance P.L a/c prepared.
57) What Is Convertible Debenture?
A long-term unsecured, interest-bearing corporate bond that can be exchanged for common
shares.
58. What Is Its Effect On EPS?
Ans: Convertible debenture is one which can be converted into an equity share after a chosen time
period.
EPS is ratio of Profit After Taxes to No of Shares Outstanding.If a convertible debenture is
converted into 2 equity shares, then no of outstanding shares will increase which leads to decrease
in EPS.
59. Is It True That Indian Currency Has To Be Converted In Foreign Exchange Before
Going To Other Countries?
Ans: Of course. There is no ambiguity, conversion is must. e.g. if you go to England u cannot do
any transaction through INR. You have to convert it to GBP (Currency of England).Thus
wherever u go to foreign country u need to convert to that respective currency. There are some
theories upon which conversion rate is determined.
The basic reason behind this requirement is that, if govt. or ministry of external affairs will allow
the outflow of Indian currency to any other country without converting it to respective country's
currency then the Indian currency might be used for illegal activity. Also the strength of the
economy is somewhere evaluated by having foreign currency. If a country holding larger foreign
currency, they could make payment for import transactions. So if the Indian govt. allows the INR
to be outflow then they are indirectly allowing other countries to be stronger when they will
intend to make transactions with Indian merchandise.
60. What Is A Swap?
Ans: A swap is a derivative in which counterparties exchange cash flows of one party's financial
instrument for those of the other party's financial instrument. The benefits in question depend on
the type of financial instruments involved.
Swaps can be used to hedge certain risks such as interest rate risk, or to speculate on changes in
the expected direction of underlying prices.
61. What is Dividend?
Ans: A distribution of a portion of a company's earnings, decided by the board of directors, to a
class of its shareholders. The dividend is most often quoted in terms of the dollar amount each
share receives (dividends per share). It can also be quoted in terms of a percent of the current
market price, referred to as dividend yield.
62. On Which Basis Sensex And Nifty Will Be Measured And Also How The Inflation Rate
Measured?
Ans: Sensex and Nifty are calculated based on Free float Market Capitalization. The Difference is
that Sensex is an average of 30 companies and Nifty is an average of 50 companies. Inflation rate
is measured based on Whole Sale Price Index
63. What Is The Problem That Is Being Faced By Fixed Maturity Plans Today?
Ans: Fixed Maturity Plans: Fixed maturity plans are investment schemes floated by mutual funds
and are close-ended with a maturity period ranging from three months to five years. These plans
are predominantly debt-oriented, while some of them may have a small equity component.
The objective of such a scheme is to generate steady returns over a fixed-maturity period and
immunizing the investor against market fluctuations.
During the meltdown, the fixed mutual funds had to bear very heavy withdrawals due to panic
among investors. 90 per cent of the assets the mutual funds has bought were rated AAA or P1
plus, depending on whether they were long term or short term assets. But in the coming months
these MFs will face huge redemptions, leading to a problem again.
64. What Is The Concept Of Finance Accounting?
Ans: A field of accounting that treats money as a means of measuring economic
performance instead of as a factor of production. It encompasses the
entire system of monitoring and control of money as it flows in and out of an organization
as assets and liabilities, and revenues and expenses.
Financial accounting gathers and summarizes financial data to prepare financial reports such
as balance sheet and income statement for
the organization's management, investors, lenders, suppliers, tax authorities, and
other stakeholders.
67. HOW TRADING GOES IN STOCK MARKETS. I.E. IN BSE HOW WE ARE
KNOWING THAT A COMPANYS SHARE IS INCREASING OR DECREASING?
Trading in stock market is means buying and selling of shares with the help of computer terminals
the tradings will carry out as per the investors. With the help of indicator in terminals and with
the help of company performance we come to know the increasing and decreasing price of share.
68. WHAT IS MAIN COURSES THAT PRICE OF THE SHARE GOES UP AND DOWN
IN DAILY TRANSACTION?
Stock prices are determined in the marketplace, where seller supply meets buyer demand. But
unfortunately, there is no clean equation that tells us exactly how a stock price will behave. That
said, we do know a few things about the forces that move a stock up or down. These forces fall
into three categories: fundamental factors, technical factors and market sentiment.
72. HOW DOES RUPEE STRENGTHEN WHEN THE RESERVE BANK OF INDIA
SELLS DOLLARS IN THE MARKET?
When RBI sells dollar the buyer has to pay in rupees which leads to the increase in demand of
money which leads to the rupee appreciation.
Q.77 What Is The Meaning Of Circuited In Share Market? Explain With Example?
A circuit is like a limit set during stock market trading hours. There is an upper circuit and a
lower circuit, It means that if a stock price of a particular company rises or falls, trading will stop
for that stock if it rises or falls ahead of the circuit.
The cost of capital is a term used in the field of financial investment to refer to the cost of a
company's funds (both debt and equity), or, from an investor's point of view "the shareholder's
required return on a portfolio company's existing securities".
Explain the measure of cost of capital ?
Measures of cost of capital is calculating cost of capital on the basis of equity and debt (rate of
interest) so as to make less cost of capital for the firm.
84. What are the componants and companies of BSE Bombay stock exchange sensex? this is the
current list of companies in the BSE-30 benhmark
index. but it keeps changing DO NOT REMEMBER ALL 30 JUST REMEMBER TOP 5
RELIANCE ENR
ACC LTD
GRASIM IND
DLF LTD
RELIANCE CAP
TCS
INFOSYS TECH
TATA MOTORS
TATA POWER
WIPRO
MAH & MAH
SBI
ICICI BANK
HIND UNI LT
BHARTI TELE
RELIANCE
STERLITE (I)
MARUTI UDYOG
REL COM LTD
HINDALCO
HOUS DEV FIN
ONGC
JAIPRAK ASSO
LARSEN & TOU
NTPC LTD
BHEL
H D F C BANK
TATA STEEL
SUN PHARMA
ITC
M& M
TCS
L&T
86. Corporate Social Responsibility Is Outside The Scope Of Business Houses. Explain Why
You Agree Or Disagree?
I Wouldnt
Take ITC for instance. Their e-chopal initiative was a remarkable effort in freeing the farmers
from the clutches of traders. They now have better understanding of the prices prevailing in the
market, and hence can generate more money.
The Tatas have been known for their philanthropic activities. So it would be incorrect to state the
above statement.
87. What Is The Difference Between Prepaid Expenses And Preliminary Expenses?
prepaid expenses refers to payment of money in advance before getting the benefit of it but
preliminary expenses refers to the expense which incurred by the company at the time of
incorporation and the utility of this expense carries over a period of time and thats why it is not
completely written off in the bigging itself.
88. What Is The Difference Between Long Term Loan And Debt?
long term loans are taken for the purpose of long term investments or capital investments but debt
are taken for the purpose of maintain the shot term financial needs of the company.
89. What Is The Difference Between Sensex And Nifty?
Nifty is an indicator of the performance of the companies listed in national stock exchange
situated in delhi. its an index or a benchmark of the financial performance of the companies.
Sensex is an indicator of the financial performance of those companies which r listed in Bombay
stock exchane situated in Bombay.
Q.90) what is a portfolio?
Ans: A grouping of financial assets such as stocks, bonds and cash equivalents, as well as their
mutual, exchange-traded and closed-fund counterparts. Portfolios are held directly by investors
and/or managed by financial professionals.
Q.91) In Stock Market I Find the Term Futures and Options? What Was the Meaning of
That sensex Futures And Options?
Ans: Futures Contract: A futures contract is an agreement to buy or sell an asset at a certain
time in the future at a specific price.
Option: An options contract is nothing but the right to buy or sell something at a specified price
within a period of time.
Q.92) What Is Trial Balance?
Ans: The general purpose of producing a trial balance is to ensure the entries in a company's
bookkeeping system are mathematically correct. OR Preparing a trial balance for a company
serves to detect any mathematical errors that have occurred in the double-entry accounting
system.
Q.93) What Are Hedge Funds?
Ans: Hedge funds are most often set up as private investment partnerships that are open to a
limited number of investors and require a very large initial minimum investment. Investments
in hedge funds are illiquid as they often require investors keep their money in the fund for at least
one year.
Q.94) What Are Valuation Accounts?
Ans: Reserve account created to offset changes in the value of a firm's assets. Examples are
accumulated depreciation and allowance for bad debts. Also called valuation reserve.
Ans: A cost that does not change with an increase or decrease in the amount of goods or services
produced. Fixed costs are expenses that have to be paid by a company, independent of any
business activity.
Q.97) In Banking Industry Difference Between Interest Income And Interest Expenses Is
called As ............
Ans: Net Interest Income
Q-103: What Are The Key Steps Involved In Formulating Treasury Policy Of A Firm?
Ans: Following are the Key Steps Involved in Formulating Treasury Policy of a Firm:
1) Investment
2) Cash Management
a certain amount. Value at risk is frequently calculated for either one day or two week periods,
and is generally given as an X percentage chance that the portfolio will lose Y dollars.
Stocks are fully paid up whereas shares may be fully paid up or partly paid up.
Shares may be issued when a company is incorporated but stock cannot be issued under such
circumstances. Only fully paid shares can be converted into stock.
Shares are always registered and not transferable by mere delivery but stock man may be
registered or unregistered or unregistered stock can be transferred by mere delivery.
137) How To Measure Cost Of Capital? Explain The Measures Of Cost Of Capital
Ans:
The cost of Capital to a company is the minimum rate of return that it must earn on its
investments in order to satisfy the various categories of investors who have made investments in
the form of shares, debentures or term loans.
138) What Is Futures Contract?
Ans:
A futures contract is a type of derivative instrument, or financial contract where two parties agree
to transact a set of financial instruments or physical commodities for future delivery at a particular
price.
139) What Is Risk?
Ans:
The Oxford English Dictionary (Oxford University Press, 1971) defines risk as a "hazard, danger;
exposure to mischance or peril". Therefore, to put oneself "at risk" means to participate
voluntarily or involuntarily in an activity or event that could lead to injury, damage, or loss. In
business sense, putting capital at stake.
140) What Is Accounting?
Ans:
143. What Is The Difference Between Single Point Tax And Value Added Tax?
ANS. Tax (Income tax) is payable on your net profits that you make with your business. VAT
(Value-added tax) is payable on your net taxable supplies
144. WHAT IS BRS?
ANS. A form that allows individuals to compare their personal bank account records to the
bank's records of the individual's account balance in order to uncover any possible discrepancies.
145. WHAT IS EQUITY?
ANS. A stock or any other security representing an ownership interest.
146. What Is Dividend Pay Out Ratio?
ANS. The payout ratio provides an idea of how well earnings support the dividend payments.
More mature companies tend to have a higher payout ratio.
147. What Are Accounting Principles?
ANS. The rules and guidelines that companies must follow when reporting financial data. The
common set of accounting principles is the generally accepted accounting principles (GAAP).
148. What Is Euro Bond?
ANS. A bond issued in a currency other than the currency of the country or market in which it is
issued.
149.
of speculative trading going on in fixing the oil price and that results in the dollar's and other
currency's value. All have a cascading effect on the price of the commodities.
Ans:Bonus dividend are used with stock a one time extra dividend that is in addition to the usual
dividend payment received from owing the stock.
Q.162. What Is Fixed Cost?
Ans: A cost that does not change with an increase or decrease in the amount of goods or services
produced.
173.What Is Amalgamation?
Amlgamation is nothing but joining of two companies.one company join to another company
after they are making a new company is called AMALGAMATION.Amalgamation is a union of
two or more companies, made with an intention to form a new company.
174.Differentiate Between Horizontal And Vertical Merger
Horizontal Merger (Integration) = When a company expands its business into different products
that are similar to current lines. Vertical Merger (Integration) = When a company expands its
business into areas that are at different points of the same production path.
175.What Is Hedging?
Hedging means reducing or controlling risk .A hedge is an investment position intended to offset
potential losses/gains that may be incurred by a companion investment.
182. If Both The Tax Rate & Interest Rate Is 10%. Then From Where The Company Raise Fund
From Debt Or Equity. And Which One Is More Suitable.
Debt ang equity to raised is Rs 500
let income is Rs 100 ( When debt is raised )
intrest(-) 50
so, Tax (-) 5
PAT = 45
When equity is raised
intrest(-)0
Tax 50
PAT = 50 so,answer is equity option is better
Sorry, go further, In first case equity is 400 hence net profit on equity is 45/400 = 11.25% and in
the second case it is 50/500 = 10% hence first case is better
183. What Do You Understand By The TermCapital Gains Used Inthe Income Tax Act?
What Are The Rules Regardingexemption Of Capital Gains.
Capital gains are profits from the sale of a capital asset, such as shares of corporate stock, a
business, a parcel of land, or a piece of art. Capital gains are generally included in taxable income
but are often taxed at a lower rate; under current law, for example, most long-term capital gains
face a top rate of 15 percent.
191) what is meant by fidelity funds, Inception date, right issue and stock split?
Fidelity fund: Fund available in limited circumstances for clients who have suffered a loss
because of a defalcation
Inception Date: The date the insurance policy begins.
Right issue: An issue of rights to a company's existing shareholders that entitles them to buy
additional shares directly from the company in proportion to their existing holdings, within a
fixed time period. In a rights offering, the subscription price at which each share may be
purchased in generally at a discount to the current market price.
Stock Split: An issue of new shares in a company to existing shareholders in proportion to their
current holdings.
The Bank rate is the rate at which commercial banks, which are temporarily short of cash, can
borrow from RBI.
The repo rate enables banks, to acquire funds from RBI by selling the securities and at the same
time agreeing to repurchase them at a later date at a predetermined price.
options
options are 2 types
1. call option : a Call Option gives its buyer the right to buy shares of the underlying security at
a fixed price before a specified date in the future-usually three, six, or nine months. For this right,
the call option buyer pays the call option seller, called the writer, a fee called a Premium, which is
forfeited if the buyer does not exercise the option before the agreed-upon date. A call buyer
therefore speculates that the price of the underlying shares will rise within the specified time
period
2. put option : The opposite of a call option is a Put Option which gives its buyer the right to sell
a specified number of shares of a stock at a particular price within a specified time period. Put
buyers expect the price of the underlying stock to fall.
197. On Which Basis Sensex And Nifty Will Be Measured And Also Howthe Inflation Rate
Measured ?
ANS : Sen sex and Nifty are calculated based on Free float Market Capitalization. The
Difference is that Sen sex is an average of 30 companies and Nifty is an average of 50
companies. Inflation rate is measured based on Whole Sale Price Index
198. What Is Merger? What Is Acquisition? What Are Motive Behind Mergers And
Acquisitions?
ANS :
Merger : The combining of two or more companies, generally by offering the stockholders of one
company securities in the acquiring company in exchange for the surrender of their stock.
Acquisition : A corporate action in which a company buys most, if not all, of the target
company's ownership stakes in order to assume control of the target firm. Acquisitions are often
made as part of a company's growth strategy whereby it is more beneficial to take over an existing
firm's operations and niche compared to expanding on its own. Acquisitions are often paid in
cash, the acquiring company's stock or a combination of both.
Motive Behind Mergers And Acquisitions?
Tax advantages
Increases liquidity for owners
199. Raising Funds Through Debt-Equity In Indian Economy. If A Firm Is Going To Use It
&After Year If Depression Will Continue In Economy & It Faces Inflation?
ANS :
equity will be the best choice because the risk of the company till the payment of interest on
bonds is reduced so that the company will not be in a serious position to pay the debts off and risk
in equity side will be till the extent of investors expectations, which may lead the share prices bit
low in their market price as it is common in a depression economy.
Its better to have more of equity because if inflation increase the interest rate also increase.
ETF is exchange traded fund. As the name suggest it is traded on the stock exchange like a stock.
It is made up of basket of assets like a mutual fund.Its price changes every second like any other
stock. It does not have a NAV like mutual fund which is calculated at the end of the day.
208. When Inflation Was High Also The Recession Was High Howthese Two
Contradictorythings Occur At A Same Time
It is totally depend on the mentality of the people because if inflation is high,result is that price is
high of the commedities so people think about the future so they start to invest thier money and
save expenses. Result is that lack of the liquidity in market and if there is no proper liquidation in
market recession is high.
Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against
securities. It enables banks, to acquire funds from RBI by selling the securities and at the same
time agreeing to repurchase them at a later date at a predetermined price. When the repo rate
increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI
wants to make it more expensive for the banks to borrow money, it increases the repo rate;
similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate
So keeping securities and borrowing is repo rate, simple borrowing is bank rate.
225. What is a Debenture?
A type of debt instrument that is not secured by physical assets or collateral. Debentures are
backed only by the general creditworthiness and reputation of the issuer. Both corporations and
governments frequently issue this type of bond in order to secure capital. Like other types of
bonds, debentures are documented in an indenture.
226. What Are Quick Assets
Anything having commercial or exchange value that can easily be converted into cash, or that is
already in cash form. Quick assets are the highly liquid assets held by a company, including cash,
marketable securities and accounts receivable. Quick assets are often calculated as current assets
(cash + marketable securities + accounts receivable) minus inventories (since inventories are
often a firm's least-liquid current assets). Quick assets are used by companies to calculate certain
financial ratios that are used in decision making, including the quick ratio.
234. Now a Day Which Type Of Fund Is Best In Share Market? Why
Now days Bluechip funds are best in share Market because they give high and stable returns with
risks.
235. What Is The Official Criterion For Blue-Chip Companies?
The Company which is high in Market Capitalization, Volume, Profit, and Performance are Blue
chip Companies
236. What Is Sensex?
Sensex is Sensitive Index of BSE best 30 stocks which often keep on changing in the Index as per
their performance
237. What Is The Effect Of Crr Hike On Market?
The Crr hike will keep more Reserve funds in the Bank and Lending will be reduced.
Q255. What Will Happen If An Organization Does Not Maintain The Sufficient Working
Capital?
Working Capital is the life blood of business organization. Working capital is the minimum
amount of capital that requires meeting day to day business expenses. for eg:- purchase, payment
of wages, salary, daily expenses, etc.
Q256. Explain the Role of Working Capital in Capital Budgeting?
Capital budgeting is the process by which the financial manager decides whether to invest in
specific capital projects or assets. In some situations, the process may entail in acquiring assets
that are completely new to the firm.
Q257. What Is Current Assets Minus Current Liabilities?
Working Capital